Tapestry Inc (NYSE:TPR) shares rose 3.6% in Thursday morning trading after the luxury fashion company reported a stronger-than-expected second-quarter performance, driven by demand for its Coach brand.
Tapestry posted revenue of $2.5 billion for Q2 fiscal 2026, up 14% from a year earlier and above analysts’ consensus of $2.29 billion. Adjusted earnings per share climbed 34% to $2.69, exceeding the Street estimate of $2.19.
Gross margin improved to 75.5%, a 110 basis point increase from the prior year.
Coach revenue rose 25% to $2.14 billion, boosted by North America sales up 27% and double-digit growth in Greater China and Europe. The brand’s leather goods, particularly the Tabby, New York, Teri, Juliet, and Laurel bag families, as well as footwear lines, saw mid-teen percentage gains in both average unit retail price and units sold.
Kate Spade, in contrast, saw sales decline 14% to $360 million, reflecting ongoing moderation in that segment.
North America remained the largest market at $1.72 billion, up 17% year-over-year (YoY), followed by Greater China at $343 million (+35%) and Europe at $159 million (+27%). Japan sales fell 9% to $128 million.
For fiscal 2026, Tapestry expects revenue of around $7.75 billion, above analysts’ $7.4 billion estimate, while adjusted EPS is projected at $5.45 to $5.60. The company plans shareholder returns of $1.5 billion and anticipates adjusted free cash flow of roughly $1.5 billion.
Jefferies analysts noted the company’s guidance raise was a highlight, saying Coach’s North American growth of 27% “was slightly up from 26% in Q1, aided by international handbag average unit retail price growth in the mid-teens.”
Inventories declined 4% year-over-year, excluding the recently divested Stuart Weitzman brand.
Looking ahead to Q3, the company anticipates pro forma revenue growth of roughly 14%, with Coach continuing high-teens growth and Kate Spade declining in the high-single digits. Tapestry also expects some gross margin pressure from tariffs, partially offset by lower tax rates.